The Government of Sri Lanka has formalized a major clean energy financing agreement to modernize the national electrical grid and expand clean energy access. The package comprises a $35 million concessional loan from the Asian Development Bank (ADB), a grant of Euro 15.4 million (equivalent to $16.94 million) from the European Union (EU), and a $5.5 million grant from the Japan Fund for the Joint Crediting Mechanism (JFJCM). Set to run from 2026 to 2030, the initiative will be carried out by the Energy Ministry in collaboration with Electricity Distribution Lanka Ltd. (EDL) and Lanka Electricity Company Ltd. (LECO).
As part of the modernization effort, EDL’s CEBAssist solution will be upgraded with an Advanced Metering Infrastructure (AMI) system, a Distributed Energy Resource Management (DERM) system, and distribution control centres supported by an Advanced Distribution Management System (ADMS). These digital upgrades are designed to streamline EDL’s operational and customer services, reduce downtime through faster post-outage restoration, and establish a resilient smart grid. The deployment of smart meters and supporting infrastructure will provide real-time operational visibility and control, accelerating the broader adoption of renewable power across the island.
A central component of the project is the introduction of Sri Lanka’s first Virtual Net Metering (VNM) scheme. Financed through the EU grant, the initiative will deploy 25 MW of aggregated rooftop solar photovoltaic (PV) systems to reduce electricity expenses for small and medium-scale entrepreneurs. These installations will feature state-of-the-art control capabilities to permit the National System Operator to regulate generation based on prevailing network capacity.
Within LECO’s operational jurisdiction, network efficiency will be bolstered through the installation of low-loss conductors alongside the VNM rollout. LECO will also deploy high-capacity battery energy storage systems at the distribution transformer level to enhance controllability over intermittent generation and maximize renewable hosting capacity. A targeted focus will be directed toward the Negombo area to scale network capacity for commercial and industrial loads while enhancing overall grid flexibility, resilience, and reliability.
Key Developments
- Secured a $35 million ADB loan alongside grants of €15.4 million from the EU and $5.5 million from the JFJCM for implementation between 2026 and 2030.
- Upgrading EDL’s network with Advanced Metering Infrastructure, DERM, and ADMS control centres to establish an efficient smart grid.
- Launching Sri Lanka’s first Virtual Net Metering framework, supporting 25 MW of aggregated rooftop solar for small and medium-scale enterprises.
- Deploying transformer-level battery energy storage systems and low-loss conductors within LECO’s coverage, focusing especially on Negombo.
The formal loan and grant agreements were signed at the General Treasury on 1 October. Signatories included Treasury Secretary Dr. Harshana Suriyapperuma on behalf of the Government of Sri Lanka and ADB Country Director Shannon Cowlin on behalf of the Asian Development Bank. The ceremony took place in the presence of Virginie Laffeur-Tighe, Head of Partnerships for the Delegation of the European Union to Sri Lanka, and Naoki Kamoshida, Deputy Chief of Mission (Minister) at the Embassy of Japan.